AutoNation 2000 Annual Report Download - page 18

costs and damages or the suspension or revocation of Gunderson Chevrolet's
license. Further, a resolution of the California DMV case that results in
Gunderson Chevrolet being closed, even temporarily, may subject us to
termination of the dealership's franchise agreement with General Motors.
In an action filed in state court in Palm Beach County, Florida in August
1999, Jamie R. Miranda and other plaintiffs accused one of our wholly-owned
subsidiaries, AutoNation USA Corporation, of, among other things, violating the
Florida Motor Vehicle Retail Sales Finance Act and the Florida Deceptive and
Unfair Trade Practices Act by allegedly failing to deliver executed copies of
retail installment contracts to customers of our used vehicle megastores. The
claims relate to nine of our used vehicle megastore businesses located in
Florida, eight of which have since closed and one of which is currently
operating as a new vehicle dealership. Mr. Miranda has filed the complaint on
behalf of all customers of our former Florida used vehicle megastores who
signed retail installment contracts in connection with vehicle purchases but
did not receive copies of the contracts signed by the megastores. On October
31,
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2000, the court certified the class of customers on whose behalf the action
would proceed. We have appealed this decision to Florida's 4th District Court
of Appeals.
Several of our Texas dealership subsidiaries have been named in three
class actions brought against the Texas Automobile Dealer's Association and new
vehicle dealerships in Texas that are members of the TADA. The first of these
actions was filed in November 1997. The actions allege, among other things,
that since January 1994 Texas dealers have deceived customers with respect to a
vehicle inventory tax and violated federal antitrust and other laws as well.
Two of the cases are currently pending in Texas state courts and the third is
pending in the federal district court for the Eastern District of Texas. The
allegations involve dozens of our dealerships.
We intend to vigorously defend ourselves and assert available defenses
with respect to each of the foregoing matters. Further, we have certain
insurance coverage and rights of indemnification with respect to certain
aspects of the foregoing matters. However, a settlement or an adverse
resolution of one or more of these matters may result in the payment of
significant costs and damages and, in the case of the Gunderson Chevrolet
matter, the suspension or revocation of our dealership license, which could
have a material adverse effect on our business, financial condition, results of
operations, cash flows and prospects.
In addition to the foregoing cases, we are also a party to numerous other
legal proceedings that arose in the conduct of our business. We do not believe
that the ultimate resolution of these matters will have a material adverse
effect on our business, results of operations, financial condition or cash
flows. However, the results of these matters cannot be predicted with
certainty, and an unfavorable resolution of one or more of these matters could
have a material adverse effect on our business, financial condition, results of
operations, cash flows and prospects.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of our stockholders during the fourth
quarter of the fiscal year ended December 31, 2000.
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